Neil Coles MBE, Chairman of PGA European Tour Courses PLC, said, “I am pleased to report on the continued improvement in the operating performance of the Group in line with our flagship strategy. So far this year the facilities have hosted four European Tour events.
“Looking to the future the Board is exploring the next phase of development, which would involve creatively working the existing portfolio of properties as well as searching for opportunities, that are consistent with the our strategy, to add to it.
Accordingly, W S Atkins PLC, a major consulting and support services group, have been engaged to advise the Group on the development potential and investment opportunities for peripheral land in and around the Group’s facilities. In addition, pres.co, one of the UK’s leading providers of digital business and communications solutions is also advising the Group on how to exploit its on-line communications presence.
“However, firm decisions regarding the strategic development of the business remain difficult pending resolution of any potential offer for the Company and I refer to the status of these discussions later in my statement.
“At the beginning of May the seventy-two hole complex at Fleesensee was opened and at the beginning of June the new Marquess course at Woburn was unveiled.
“The results for the first six months of the year showed a profit before tax of £1,207,000 (1999 – £1,061,000) on turnover of £4,123,000 (1999 – £3,692,000). Earnings per share were 1.3p (1999 – 1.0p).
“The number of rounds of golf played increased to 141,000 from 122,000 in the same period last year and membership and green fee income increased by £261,000 to £2,634,000.
“The cost base continues to be carefully controlled and total operating profit margins increased to 32.1% up from 24.4% in the corresponding period last year.
“Net debt at 30 June 2000 was reduced to £2,282,000 by net operating cash flows generated in the period, which resulted in gearing of 10%. This gives the Group significant capacity for further acquisitions and investments.
“The operation at Woburn is undergoing a period of change. From a membership base of approximately 1,000 over two courses numbers will gradually be increased to 1,500 following the opening of the third course, the Marquess. Business from groups, societies and casual golfers is steadily being built and trading is currently ahead of last year. We will continue to develop the management team, review staffing levels and improve work practices to ensure that the current high service levels are maintained as the business grows. The refurbishment and extension of the rest of the clubhouse facilities will be reviewed in the next twelve months. Since the half year, The Victor Chandler British Masters was again successfully held on The Dukes course and some 42,000 visitors attended the event during the week. Next year the tournament is scheduled to be played on The Marquess course.
“There has been a significant improvement in the condition of the Quinta do Lago golf course resulting from the capital expenditure programme last year, particularly the installation of the new irrigation system. Demand for tee-times continues to increase and the facility was trading ahead of budget at the half year. Some course improvements have been made since the half year and it is planned to renew the irrigation system on the Ria Formosa golf course late next year at a cost of approximately £500,000. The facility is scheduled to host The Algarve Portuguese Open in April next year.
“The planned improvements to the Kings course at Kungsangen were completed for the Scandinavian Masters tournament, which returned to the course at the beginning of August. The enthusiasm for golf amongst the Scandinavians was shown by the attendance of some 85,000 in spite of the poor weather conditions during the week. Founder Membership sales continue to be strong and there has been a significant increase in the number of corporate and society golf days compared with the same period last year. Further improvements to the facility, including changes to the clubhouse facilities, are being planned together with the overall master plan for the site.
“The profile of the facility at PGA Golf de Catalunya has been enhanced by the hosting of The Sarazen World Open golf tournament last year and The Peugeot Spanish Open in April this year. The numbers of casual visitors and groups visiting the course were ahead of budget in the first half of the year. Strong demand for tee-times since opening has brought forward consideration of the next phase of development. Master planning for the rest of the site that has outline planning consent for a second 18 holes, a hotel and some 400 residential units is currently being reviewed. Capital expenditure to improve the access to the site is expected to be completed shortly at a cost of approximately £250,000.
“An able team of people has been recruited to run the operations at Fleesensee Golf and Sports The whole resort opened at the end of April and trading has started well. All the partners are encouraged by the level of business that has already been generated and the current focus for the golf and tennis operation is to attract more of the hotel guests to use the facilities. Earlier this month, the facility successfully hosted the TUI Golf Championship, a European Tour Seniors event.
“We stated in the last Annual Report that the Company was holding discussions with a number of parties. These discussions were terminated when the Company was made aware that its major shareholders were considering various restructuring proposals which may or may not lead to an offer being made for the Company by some or all of these shareholders.
“The Board, having taken advice from Lehman Brothers, has been wholly supportive of the discussions amongst the major shareholders, which should provide the best basis for realising value for all shareholders. To date however, no formal proposals have been received by the Company from any of its major shareholders.
“Pending resolution of these discussions, the Takeover Panel has advised the Company that it must remain in an offer period.
“Roger Devlin, a Director of Hilton International, was appointed to the Board on 31 July 2000 as a non-executive Director. His wide-ranging experience, including both the leisure sector and the City, will be extremely valuable to the Company.
“Trading since the half year has been in line with expectations. The Directors believe that the figures are now beginning to demonstrate the full potential of the Group. Although the continued weakness in the Euro will continue to have an adverse effect on the translation of profits, we remain confident about the future of the business.”
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